Archive for Mortgages

It’s a great time to buy

Aug 24 | by | In the news, Interest Rates, Mortgages, Real Estate
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I’m sure you’ve heard what’s going on with the market recently: mortgage interest rates are at a record low, the Dow Jones Industrial Average has dropped dramatically a couple of times recently and home prices keep going down. Sure, these are indicators that the economy’s having trouble finding its feet and that means tough times for many people, but let’s look at it another way.

Imagine your favorite secondhand store. Personally, I like hunting around secondhand stores every now and then because you can find some totally awesome stuff. Of course, the definition of awesome depends on who’s talking. One time, I found a great surplus US Navy peacoat and snatched it up. I get compliments on it all the time, which means I’m fairly certain I made a good find there.

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my clown pants, including awesome bowling shoes

Another example of a treasure I found at a secondhand store is a pair of pants referred to at my house as my “clown pants.” I found them for a whopping $5 and have given them a great home. To me, they’re a great statement of panache and I can totally make them work. To my wife, they’re an embarrassing eyesore and she threatens to send them back from whence they came when I’m not looking.

There are some things at the secondhand store that don’t stay there for long because they’re pretty much universally awesome. To bring this back to the earlier discussion, the market indicators mean that real estate is on sale, virtually sitting on the clearance shelf with a big sign on it that says “Huge discount!”

In a couple of very specific real estate markets, you can make your investment dollar go much farther than it would in other places and we’re helping our clients buy as much of this clearance sale real estate as we can find. There are currently two places where the conditions are just right for what we’re doing and those are Las Vegas, Nevada and Phoenix, Arizona. We’re not just scooping everything up; we’ve got very specific criteria for choosing what our members buy to make sure you’re getting a valuable piece of property. We want you to end up with the real estate equivalent of a baseball autographed by Joe DiMaggio that someone had hiding in a drawer and not the $5 clown pants, just because they were cheap.

Market Still in Prime Condition for REIC-Style Real Estate

Nov 12 | by | Mortgages, Real Estate, REIC Insider, Some food for thought, Strait Path Real Estate
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House 300x199 Market Still in Prime Condition for REIC Style Real Estate

Today being Friday and all, I thought I would surf through news websites to see if anything interesting was going on in real estate news. As it turns out, I found an interesting nugget written by Alan Zibel from the Wall Street Journal. The article is titled, Home Prices Decline in Nearly Half of Metropolitan Areas.

The point Zibel makes in the article is that median home prices are still falling all across America. Home prices fell in 76 out of the 155 (or about half) areas that are tracked by the National Organization of Realtors. These numbers are for the third quarter 2010.

The reason? The government tax credit that was provided to mostly first-time home-buyers ended, so fewer people are willing to buy a home. Also, because multiple banks had fraudulently filed foreclosure documents on a huge number of homes, the investigation process has deterred would-be foreclosed property buyers.

This is good because it means that the real estate market is still producing great real estate deals for REIC clients and investors. When banks figure out their foreclosure problems, foreclosure numbers are expected to rise. This means that REIC will be able to keep providing inventory for their Strait Path, Strait Path Outright, and Strait Path Accelerate programs.

Taking advantage of the now

May 20 | by | Discount Equity, Interest Rates, lease option, Mortgages, Real Estate
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Here’s what’s happening in our market and why real estate makes sense.

An excerpt from Michael Masterson’s Journal:

Taking advantage of real estate prices that are as low as they’ve been in 20 or 30 years

It is impossible (and foolish) to try to predict the bottom (or top) of this (or any) market. But, by any measure, we have just gone through one of the biggest real estate recessions in the history of the United States.

In South Florida, for example, you can find properties for less than half of what they were selling for at the peak of the market. More important, you can buy these properties with 20% down and start enjoying positive cash flow from month one. (Four and five years ago, you couldn’t get positive cash flow out of rental units with 50% down.) So today’s prices make sense from a businessman’s perspective.

My real estate partner Peter and I have been buying homes in the $120,000 to $130,000 range (after closing costs and renovations). We are getting monthly rents of $1,300 to $1,600 on these. I am financing our deals at 4% (which is good for me). At that rate, we are making about 6% to 8% on our money, not counting appreciation.

My brother is buying up residential properties and apartment complexes in lively downtown areas, beach areas, and areas targeted for “stimulus money” renovation. He is buying at such deep cash flow prices that he is able to pay his investors (including me) minimum guaranteed yields of 7.5% plus equity participation. Because of this, he has raised a considerable amount of money in the last few months, and he is using the money to do some very impressive deals.

He just bought a 14-unit building across the street from the beach for $725,000! Think of that. Each beach-view, one-bedroom unit cost him only about $50,000 — and this apartment complex could be worth several million in the not-too-distant future. He also now controls three properties in the heart of a rapidly growing downtown, zoned commercial and residential. And even though they’re in a prime spot, he is generating yields of over 8%.

Whether with Peter, through my brother, or by myself, I will continue to invest in real estate so long as prices are low. If they go down further, I’ll buy more aggressively. I have no risk of losing money, because all the properties I’m investing in are making money on a monthly basis. Even if rents drop, I won’t be losing money. The 4% to 8% yield I’m enjoying will cover me even if rents go down another 25%, which is highly unlikely.

I get immediate income from these deals. Instead of getting 0% on my cash, I’m getting a minimum of 7.5% fully secured guaranteed yields by loaning it to my brother, and additional yield from the “after-debt” cash flow.

But the real opportunity is in the appreciation potential. As I said, I fully expect to make an extra $10 million in appreciation in the next five to 10 years as inflation pushes up real estate prices. I might make as much as $30 million, but I’m trying to be conservative.

There are some who say that real estate prices won’t inflate with the rest of the economy, but I think they will. Here’s why. Buildings are built with core commodities… lumber, copper, aluminum, concrete, steel. Labor is another big expense. You can’t have inflation without a rise in those costs.

Plus, as my brother points out, properties in many areas are selling for less than replacement value. In some cases, even if you got the land for free, you couldn’t build these homes for what you can buy them for today. That’s even after taking depreciation into account.

Last but not least, in many instances, it’s already far cheaper to buy than it is to rent. Eventually, this will turn the tide toward buying. It’s just a matter of time.

So that’s my first inflation-beating recommendation: Start buying undervalued, quality rental properties now. Don’t wait for the market to bottom. Just find properties that will give you a net cash flow of at least 4% to 9% after all expenses (including property taxes, maintenance, fees, etc.).

The First Step

May 13 | by | In the news, Mortgages, Some food for thought
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Even though our clients are experiencing unreal success through the Strait Path System, it is still important to keep in touch (just a little) with the actual real estate market and see how through all of its’ failings, we the REIC people and clients are accomplishing some pretty amazing things!

We just had our annual wealth summit with over 700 people in attendance (almost 4 times as many people as last year). Many of our clients brought friends and family members to the event, introducing them to what most of them hope will help them re-build their retirements and build a future for their families.

This month’s issue of Newsweek contains an article, “The New Math for Retirement” and the tagline? “Financial advice you’ve gotten in the past may have been misguided and miscalculated (hmm…401(K) anyone?”)

The article then goes on…”There’s one key fact of life that most retirement planning advice gets wrong: the way people actually live and spend when they retire.” Imagine that?

zzretirement The First Step

When you stop working and retire, you still have to buy food, buy gas, pay utility bills, etc. What kind of retirement is that anyways? Bills? Responsibilities?! Doesn’t retirement mean sunshine, beaches, pina coladas, vacations and visors? Sure it does if you saved up a billion gajillion dollars and plan to stop contributing to mankind and experience personal growth and development. You don’t have a billion gajillion dollars and have about 5 years before retirement?

Well luckily, through REIC, some hard work and an “I-Can-Do-It!” attitude, we’ll help you every step of the way to help you achieve that financial liberation you need to become successful, not just financially but in every aspect of your life. Reading our blogs and watching the testimonials of others who have “made it” is a great first step.

Real estate is not an easy road, but we’ll be right there with you. So all you gotta do is just start walking! Visit our website and attend an event to learn more!



All About REO’s

Apr 22 | by | Discount Equity, Mortgages, Real Estate
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We know you’ve heard all about REO’s. You know that “90% discounts” you hear on the radio and see all over our videos, websites, seminar presentations and blog posts. Well, last week, in MSNBC.com’s Real Estate section, there was article all about REO’s. Check this out from the article:a23639c5f5d24140a91db16726cb50d8 All About REOs

“The number of homes entering REO status (short for “real estate owned” by a bank) climbed 35% to 257,944 — the highest quarterly total ever — from 190,543 in the first quarter of last year and 9% from the previous quarter, according to real-estate data firm RealtyTrac.”

Pretty interesting stuff. But the more interesting part, is about how many REO’s the banks have and how many are available on the MLS. Keep reading!

“Just how many foreclosures move through the foreclosure process and when banks sell them will be key factors in how much more real-estate prices could fall before they recover.

Most of these bank-owned properties are not making it onto multiple listing services, analysts and brokers say, despite banks having more of them to contend with.

“We have about 860,000 REOs in our database, and only about 30% of them are available for sale on the MLS,” Sharga says. “That means you have another 550,000 to 600,000 that have yet to hit the market.”

So if banks have all of these REO’s and are selling only 30% of them and have very limited time to get the toxic assets off of their books, how do they get rid of them? These aren’t available to the general public. But that’s where our “90% discounts” come in to play. Come to an REIC seminar to learn more about how REIC is participating in purchasing the 550,000 to 600,000 homes that have yet to hit the market.

Becoming Profit-Conscious vs. Interest Rate-Conscious

Dec 2 | by | Interest Rates, Mortgages
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One issue we continually strive to overcome is the interest rate-conscious mentality when it comes to financing investment properties.

Here is one of our “secrets” that can help make you real estate rich: Higher interest rates can make you more money than lower rates.

This statement may seem shocking, so let’s look at several examples. As we look at these examples, understand that each of these principles is a critical ingredient in the secret formula for taking people with average credit and average income and leveraging more homes on their credit than any other lending institution could do.

Keep Your Eye on the Profits

Investors keep their eye on the profits. They focus on what they gain by buying a home, as opposed to a consumer, who focuses on the rates and what they lose in acquiring a home.

The Strait Path™ system will help you acquire many homes, but this cannot happen with the person whose only expectation is getting the best rates, because that reality does not exist for the investor who wants to maximize their portfolio.

Do not focus on the 8% interest rate as your loss, but rather the 65% profit as your gain. The impact on your profit margin between a really good and a really bad interest rate is less than a few percent.

Lesson: Keep your eye on the profits!

Each Home Makes you Wealthier

All banks are not the same, and you must pick banks in a manner that will ensure you can leverage as many homes on your credit (with your job situation) as possible, whether it is 3 homes or 25.

The profits from each home you buy increase your net worth by 6 figures. Accordingly, REIC goes to banks that often have steeper rates in order to leverage more homes on your credit.

You may have to exchange a 1.5% higher interest rate for an additional $150,000 profit. The issue is not over rates, but rather how many banks are willing to continue lending for your portfolio.

Lesson: Don’t go with the banks with the lowest rates, but rather the banks that will let you buy the most real estate.

Cracking the Banking Code

The banking industry is a complicated world that requires specific training and cutting-edge information and updates to stay abreast of all your banking options.

One of REIC’s secrets to rapidly acquiring so many homes is dealing with largely unknown facts of how the banking industry works.

Banks make a decision whether or not to accept your next purchase based on what mortgages are already on your credit, how quickly they were acquired, what banks they are with, how your file was submitted, and what you are doing with the properties, to just name a few criteria.

We have learned how to maximize your ability to acquire the most investments possible. Our formula for leveraging several homes on your credit requires us to use banks in specific combinations, so that each additional bank will follow and accept your next investment purchase.

As a result, we can buy twice as much real estate if we are not just focusing on the rates, but on which banks we can get to agree to give you your next loan.

This often means that REIC will choose a bank with a higher interest rate so that we can already be qualifying for your next homes.

Lesson: Paying higher interest rates to particular banks enables us to purchase twice the investment properties, as compared to what we could do if we just went to the banks with the lowest rates.

Selecting the Right Loan

You cannot just go and get any loan if you are looking at maximizing your portfolio.

For example, if your goal was to pay the home off over time, and you wanted a 30-year or a 15-year loan to do it, that strategy would cap out very soon. You would qualify for only a fraction of the loans than you could with Interest-Only loans and ARMs (Adjustable Rate Mortgage).

We educate our members on the loan process and make sure you are completely comfortable with the loans we suggest. These loans capitalize on the best cash flows and overall profits for your portfolio.

*Please note most loans closing right now are 30-year fixed because they currently offer the most advantages.

Lesson: Only certain loan programs will allow you to leverage yourself into your maximum financial potential.

What Are You Doing with Your Homes?

Another critical key to buying so many homes with the REIC system is what you are doing with your investment properties.

By using our proprietary Compassionate Financing™ system, you will collect between $300 and $600 more than you would by simply renting it out.

This corrects your DTI (debt-to-income ratio) and brings your personal finance ratios in line so that you continue qualifying for additional homes.

Lesson: A well-sold Compassionate Financing™ contract is the key to overcoming your financial ratio issues that typically cut your investing short.

Protect Your Future Portfolio

Weaving carefully through the banking industry requires a considerable amount of effort and strategy.

Doing a loan here or there throughout this process with another lending company, including any refinances of your own homes can quickly unravel your ability to buy as much real estate as possible.

Protect your portfolio by keeping your entire lending business to the professionals that have the foresight and the hindsight to see complicated lending issues from afar off.

Lesson: Solving and dodging these issues usually happens long before we are faced with a complication.

Summarizing your Profits

All of these factors ultimately add up to buying more real estate than you could with your old financial paradigm.

Consider, for example, the following scenarios comparing someone who is rate conscious to someone who uses our proprietary financing formula.

In Scenario A, our client may be able to buy 3 investment properties total, with the combined rates on all three properties of 23% (8% + 7% + 8% =23%), and a total profit after 5 years of $360,000 ($120,000 + $110,000 +$130,000), or 195% annualized return (65% + 60% + 70% = 195%).

This 195% annual ROI (Return on Investment) was created with a total interest rate cost of 23%.

In Scenario B, our same client is able to buy 6 investment properties total, with the combined rate of 52% (8.5% + 8.0% + 8.5% + 9% + 9.5% + 8.5% = 52%), and a total profit of $685,000 ($115,000 + 105,000 + 125,000 + 115,000 + 105,000 + 120,000), or a 355% annualized return (60% + 55% + 65% + 60% + 55% + 60% = 355%).

This 355% annual ROI was created with a total interest rate cost of 52%.

In Scenario A, the client may have received some competitive investor interest rates, but they led to an outcome of only being able to buy 3 investment homes.

In Scenario B we had higher rates, but we were able to create $685,000 of profits compared to $360,000.

Why Having More Homes is Better

Buying more homes is not just about creating more profits.

Some of you have goals that extend beyond an extra $500,000 in the next 5 years, and a 5-6 home portfolio. For you, the key to your success lies in creating a powerful portfolio that can attract future partners.

Obviously, 6 profoundly profitable homes will have more credibility for attracting partners than 3 homes. These partners have money and credit you will now use on all your future investment deals.

You can now participate in real estate with no money out of your pocket and no credit. This portfolio unlocks your ability to thus create unlimited returns and now have limitless financial potential.

Higher Rates = Greater Profits

The take-home lesson is that focusing on interest rates can distract you from the more important issues.

REIC’s experience has shown that time and time again, people make investment decisions based on rates when they should be focusing on the profits.

Overlook rates that are 1 or 2 points higher, if it means that you can qualify for even one more home.

This is the investor’s financial paradigm, and it will hopefully lead you to extra six-figure profits this year that you might not otherwise have realized.

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